Seriously, just pay something even if it is only $10/hr or whatever service student jobs pay in the area. Not every kid can afford to work free for a summer regardless of the experience gained. Some people need to have a job with some income. Thats why some less privileged students get stuck working in restaurants and bars. Are you interns really not doing enough work to warrant minimum wage?
to a bootstrapped entrepreneur who has literally run himself into the ground to get a b2c venture off the ground in a non-startup town, i can't afford to pay. the situation is made abundantly clear before they step through the door (and when i say door, i mean metaphorically because we don't even have an office...we meet on campus) ... yet, we still have students lining up the 'door' to intern with us every semester cuz we're the sexy opp in town (startup + music).
if i had the money/means/funding, i would have no problem compensating the ones that were bringing value to the table.
this should lead to a subsequent thread though:
how should i pay for students workers when the CEO/company has no money coming through? as many credit cards as i can get my hands on?
Okay I apologize then. There are tons of companies who can afford to pay who don't. I think that a good way to motivate them is to give them a broad thing to do and let them try to do it whatever manner they want. Make it clear to them that you want them to be paid with learning and building up their skills.